On October 27, 2020, the Internal Revenue Service (IRS) announced the 2021 Flexible Spending Account (FSA) dollar limits. For 2021, there will be no change to the amount that an individual can contribute annually to an FSA, i.e., $2,750. For those plans that contain a carry-over provision, the IRS did increase the amount that an individual can carry-over from $500 to $550.
Employers can choose the dollar limit they wish to impose under their plans up to a maximum of the approved IRS limits. Annually, employers should work with their consultants and plan vendors to note the plan maximum they will implement and ensure that all employee communications and plan documents are updated accordingly.
Read the Legal Update for more details and helpful links related to the 2020 regulations.
Contact your Cowden representative for more information on this or other compliance issues.